Unemployment Rising In Frontier Fracking Towns

It seemed like the perfect solution for many struggling American workers. Go west, young man, and find a fracking job. And for many the gamble would pay off, at least for a time. Amid yesteryear’s high oil prices, oil companies were drilling, exploring, and shipping oil as quickly as they could, and demand for labor, even unskilled, was high.

For many of America’s unemployed workers, the Dakotas quickly became an oasis of prosperity, where workers could find steady jobs with high wages. Williston, N.D. has tripled in size over the last few years, with more than 30,000 people no living in the city. Even from the beginning there were problems, however.

Unemployment in North Dakota

Housing was often in short supply, and expensive, employment at the best of times was still often long-term temporary, and North Dakota itself was always a quiet backwater, not quite ready for a huge influx of workers. Outside of the oil industry, jobs could be hard to find, which made it difficult, if not impossible, to uproot entire families. Workers could be expected to be separated from families for months, if not years on end.

Still, for many the move was worth it. With cheap oil prices making fracking economically unfeasible, however, many oil companies have been forced to curtail or completely shut down their fracking efforts.

From December of 2008 until this past March North Dakota enjoyed the lowest unemployment rate in the country, with the rate peaking just about 4% even in the worst of the recession, and dropping well below three percent during the recovery. The unemployment rate, however, has slowly been ticking up from 2.5% to 2.9% and is no longer the lowest in the country (that distinction belongs to Nebraska).

Unemployment and the oil prices

If oil prices remain low for much longer, some speculate that the rate could grow much higher, especially if displaced workers stay in town. While many will return home, some may have no home to return to or lack the resources to make the return trip.

Larger oil companies may be able to stave off dramatic staffing and production cuts, relying on healthy balance sheets to tide them through this current period of cheap oil. Small companies, many of which borrowed heavily during the oil boom, may struggle to stay a float, however. Many will be forced to lay off staff, or even close their doors completely.

Reports on the ground indicate that local staffing agencies are being overwhelmed by out of work job candidates. Companies like U-Haul are reporting a drop for people renting vehicles to get to the oil frontiers, while more and more people are renting vehicles to leave town.

The situation is far from dire in North Dakota and elsewhere, but workers considering a move to the frontiers might want to reconsider.